Question

Explain with the help of diagram, the effect of the following changes on the demand of a commodity:

A fall in the income of its buyer, if the commodity is inferior.

Answer 1

A fall in the income of a buyer leads to an increase in demand for inferior goods because consumers prefer to buy more low-priced goods instead of expensive alternatives.

For example, when the income of a consumer falls, the demand for coarse grains may increase.